In 1992 he was brought into the Russian cabinet and President Yeltsin appointed Chernomyrdin to be prime minister in 1992 in what was seen as a concession to those who wanted to go slowly on reform. When the reformers lost the election in 1993, Chernomyrdin's power increased.

Some political observers were predicting that Chernomyrdin would be dumped before the election as a concession to the Communist anti-reform opposition, but Yeltsin won the election and reappointed him - and surprisingly, the Communist leaders in Parliament also approved his nomination.

Yeltsin continued to battle anti-reform opponents. In December 1995, Communists won a third of the seats in Parliament, voted in by an angry, frustrated electorate, and proving to Yeltsin that economic reform had been painful to many Russians.

Chernomyrdin kept himself out of the political infighting during Yeltsin's presidential reelection campaign in the summer of 1996, and managed to convince his boss that he had no political ambitions for the presidency.
After Yeltsin's win, he asked Chernomyrdin to stay on and form a new cabinet. The Russian Parliament voted to keep Chernomyrdin in the post of prime minister, who lead a centrist political movement called "Our Home Is Russia".

Chernomyrdin emerged a hero when he intervened to save the lives of hundreds of Russian hostages being held by Chechen separatists in January 1996.

Nevertheless, Yeltsin, saying a new team was needed to ensure progress on economic reforms, fired Chernomyrdin on March 23, 1998 in a bombshell announcement that also ousted the majority of Yeltsin's cabinet.

In August, 1998, Yeltsin again sought to appoint him prime minister, but the Duma refused to approved him.

In 1999, Yeltsin sent him as a special envoy to former Yugoslavia, in the midst of the Kosovo crisis, and Chernomyrdin subsequently returned to Gazprom as its chairman. He was elected to the Duma in December, 1999, but his Our Home Is Russia party won only 1.2% of the vote nationally.
In 2001 he was appointed ambassador to Ukraine.